Merc, Cbot End Conference On Note Of Teamwork

BOCA RATON, FLA. — An annual gathering of world futures industry chieftans concluded Saturday with Chicago commodity exchange leaders promising to expedite a near- revolutionary plan to merge some of their most vital exchange operations.

The chairmen of the two Chicago exchanges said that a new committee has been given the highest priority to consolidate overlapping functions in three key areas-trade clearing, marketing and development of new technologies.

The chairmen of the Chicago Board of Trade and Chicago Mercantile Exchange made their announcement at the close of an annual conference at which exchange leaders and heads of the world`s largest commodity brokerages returned repeatedly to a central theme: A need to keep costs down to stay competitive in a world increasingly populated by newer and, in some cases, more technologically advanced futures exchanges in the Far East and parts of Europe.

For four days, Chicago exchange presidents and chairmen listened to overseas exchange leaders, such as David Burton, chairman of the London International Financial Futures Exchange, tell them that their markets are mature and the ``great days of phenomenal growth are over.``

They also were reminded by members of Congress who spoke there and by a torrent of market studies that their share of world trading volume has slid from 84 percent of the total a few years ago to about half that.

Merc Chairman Jack Sandner, and his counterpart at the Board of Trade, William F. O`Connor, said merging of clearing operations, a formidable task ardently supported by huge commodity brokerages, could be a reality next year. Currently, the Board of Trade Clearing Corp., a separate entity from the exchange, clears and guarantees all trades executed at the Board of Trade. That function is conducted by scores of people directly employed by the Merc. Because of the independent clearing operations, large brokerage firms, known as futures commission merchants, which are members of both exchanges, frequently must employ extra staff.

The first concrete results of the consolidation committee will emerge yet this month, when Merton Miller, a Nobel laureate and University of Chicago Business School professor, flies to the Far East on a marketing and educational trip funded by the two exchanges.

Miller is being sent to Taiwan to educate lawmakers there on the importance of futures markets to a healthy economy. The Taiwanese government is studying legislation that would permit futures trading for the first time. Two other jointly funded marketing trips, one to Japan in spring and another to London in the fall, also are scheduled, says Barbara Richards, a Merc marketing director. She also noted that separate advertising campaigns, including billboards at O`Hare International Airport, would be consolidated by summer.

``I can tell you that the merging of our operations, to save money, is of the highest priority. There is none higher,`` said Sandner, who agreed that merging of clearing operations would not be simple.

``Separate clearing operations don`t make any sense,`` said O`Connor.

``That means one firm with a membership at the two exchanges has to employ people to deal with separate trade clearing operations.``

Symbolically at least, the decision by the Merc and the Board of Trade to bury enmities and merge some functions was in evidence at this 16th annual gathering of the Futures Industry Association, the premier trade group for nearly two dozen of the world`s most important futures exchanges and the largest commodity brokerages.

The exchanges, which in past years held expensive and competing social functions, cohosted a dinner for the press and a cocktail party for association members.